Wakilii

BM Consult (1999) Limited v Uganda National Farmers Federation (Civil Suit No. 481 of 2014)

High Court · [2017] UGCOMMC 4 · 2017 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract concerning non-payment for consultancy services
Decision
Plaintiff granted declaratory relief entitling it to reasonable costs contingent upon defendant securing project financing; no immediate payment order made

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the plaintiff was entitled to reasonable costs for consultancy services rendered under a contingent agreement that required approval and funding by a project financier. The suit was premature because the condition precedent had not fully materialised: while NSSF initially approved the project, it later terminated the BOOT agreement, leaving no active financier. The plaintiff could not immediately recover payment from the defendant until the defendant sourced financing. A declaration was issued that the plaintiff is entitled to reasonable costs once the defendant obtains the necessary financing from a project financier.

Outcome

Plaintiff granted declaratory relief entitling it to reasonable costs contingent upon defendant securing project financing; no immediate payment order made

Facts

In 2007 the defendant engaged the plaintiff to conduct a feasibility study for a proposed multi-storey building project. The feasibility study was completed in August 2007 and presented to the defendant's National Executive Committee which approved it. The defendant used the feasibility study to apply to NSSF for funding. NSSF initially approved the application in April 2008 and the parties signed a BOOT agreement in September 2008. On 15 August 2008 the plaintiff and defendant executed a written contract providing that the plaintiff would be paid 2% of the total approved project cost upon completion, submission and approval of the feasibility report by the project financiers. The plaintiff rendered services and presented two invoices for payment totalling UGX 106,200,000 and USD 254,493. NSSF later terminated the BOOT agreement deeming it unworkable, though it agreed to pay reasonable costs. The defendant forwarded the plaintiff's invoices to NSSF but payment was not made. The defendant informed the plaintiff that NSSF had changed its position on paying reasonable costs.

Issues

  1. Whether there was a contract between the parties.
  2. Depending on the answer to issue (1) above, whether the contract was rendered void on account of failure of accrual of a material part thereof.
  3. Depending on the answer to issues (1) and (2) above, whether the defendant breached the contract.
  4. What remedies are available to the parties.

Orders

  • Declaratory order issued that the plaintiff is entitled to reasonable costs upon the defendant obtaining the necessary financing from the financier as envisaged by the parties in their written agreement and various correspondences admitted in evidence.
  • No consequential order made against the defendant who is under obligation to source the reasonable costs of the plaintiff.
  • Suit succeeds in a limited way with costs.

Rules and key headnotes

Contract Law — Formation of Contract — Conditions Precedent — Contingent Contracts
Where a contract stipulates that payment is contingent upon completion, submission and approval of a project feasibility report by project financiers, the obligation to pay does not crystallise until a financier has approved the project and remains committed to financing it.
Contract Law — Quantum Meruit — Recovery for Services Rendered Under Void or Unenforceable Contract
Where a contract is unenforceable or void, a plaintiff who has performed services at the request of the defendant and of which the defendant has had the benefit may recover on quantum meruit notwithstanding the unenforceability of the contract. The obligation to pay is imposed by a rule of law and not by inference of fact from the acceptance of services.
Contract Law — Estoppel — Parties Bound by Conduct and Correspondence
A defendant who has actively requested a plaintiff to submit reasonable costs for services rendered, forwarded the plaintiff's invoices to a third party financier for payment, and corresponded with the plaintiff on the basis of an existing contract is barred by the doctrine of estoppel from denying the existence of the contract or the use of the plaintiff's services.
Contract Law — Prematurity of Suit — Payment Contingent on Future Event
A suit for payment under a contract where payment is contingent upon the defendant securing funding from a project financier is premature where the financier has withdrawn from the project and the parties are still engaged in negotiations with the financier on payment of reasonable costs. The plaintiff cannot immediately recover from the defendant until the condition precedent is fulfilled or the defendant sources alternative financing.

Legislation cited (6)

Cases cited (9)

  • Dr. Karuhanga vs. N.I.C & Another (2008) HCB at page 151
  • Kaggwa v Kolin Insaat Turizm and 2 Others (Civil Suit No. 318 of 2012)
  • John Nagenda Vs. The Editor of Monitor Newspaper and another (1995) KALR 334 at page 347-348
  • Royal British Bank vs. Tarquand
  • Game Concepts v Mweru Rogers (Civil Suit No. 71 of 2012)
  • Morgan versus Bennie
  • Craven-Ellis v Canons Ltd [1936] 2 All ER 1066
  • Clarke v Cuckfield Union Guardians
  • Lawford v Billericay Rural District Council

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

BM Consult (1999) Limited v Uganda National Farmers Federation (Civil Suit No. 481 of 2014) [2017] UGCommC 4 (10 February 2017)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.